💊 The PBM Shell Game: Will the DRUG Act Really Lower Costs? | Employee Benefits

March 22, 2025

Louis C. Bernardi, “The Benefits Whisperer”

💥 Certified Healthcare Fiduciary Coach and Health Value Advisor 💥 I work with Business Leaders of mid-sized

Did you know that optimizing your healthcare plan can contribute directly to your company’s survival and growth?  ✨ When we compare the benefits of healthcare savings to findings from a recent college essay, “Ten Reasons Why Companies Keep Failing,” the connections are clear. Let’s explore how healthcare optimization addresses these pitfalls:

_____________________________________________________________________________________________________________________________________

📢 This week, Rep. Mariannette Miller-Meeks, M.D. and a bipartisan group of lawmakers introduced the Delinking Revenue from Unfair Gouging (DRUG) Act, a bill aimed at reforming Pharmacy Benefit Managers (PBMs) by eliminating their ability to profit off the price of the drugs they place on formularies. Instead of PBMs charging a percentage of the drug’s price, they would be paid a flat administrative fee—a move designed to remove their financial incentive to steer patients toward higher-cost medications.

On the surface, this sounds like a win for patients, employers, and independent pharmacies. But before we celebrate, let’s ask an important question:

⚠️ Are PBMs and their healthcare conglomerate partners already finding new ways to replace this lost revenue?

💰 The Hidden Compensation Game

PBMs have been under scrutiny for years, and each time reforms are introduced, they find new ways to maintain their profitability—often at the expense of plan sponsors and patients. The DRUG Act may succeed in removing one revenue stream, but PBMs have already diversified their income sources, including:

✅ “Rebates” and “Administrative Fees” from Drug Manufacturers – Instead of inflating list prices directly, PBMs may negotiate larger off-the-books rebates that never make it back to employers or employees. ✅ Exclusive Mail Order & Specialty Pharmacy Markups – Many PBMs own or are partnered with large pharmacy chains and mail-order pharmacies, meaning they can shift revenue to these entities through inflated drug prices or steering patients to their own services. ✅ Spread Pricing in Other Areas – If one revenue stream is reduced, expect PBMs to increase margins elsewhere, such as charging insurers more than they pay pharmacies for generic drugs and pocketing the difference. ✅ New Contract Language & Fine Print – PBMs have teams of attorneys crafting new contract loopholes before reforms even take effect. Employers who don’t aggressively audit and negotiate their agreements will still be paying more than they should.

🏥 Should Employers Consider Carving Pharmacy Out of Their Health Plan?

Given how entrenched PBMs are within the traditional health insurance model, maybe the real question is: Should commercial plan sponsors follow Medicare’s lead and separate pharmacy benefits from medical insurance altogether?

Medicare already does this through Part D, which separates drug coverage from medical coverage. However, individual Medicare beneficiaries don’t have full control to seek truly independent PBM coverage—they must still choose from pre-approved insurance carriers offering Part D plans.

But what if employers had more flexibility than Medicare members?

If group health plans were allowed to carve out pharmacy benefits, it could introduce true competition into the system:

💡 Employers could directly contract with independent PBMs that focus on transparency and pass-through pricing rather than hidden compensation schemes. 💡 Prescription drug plans could be bid out separately, forcing PBMs to compete on service, pricing, and outcomes—rather than just being bundled with the insurer’s offering. 💡 Greater flexibility for employers to choose value-driven pharmacy programs that align with their cost and care priorities.

🚨 The Bottom Line: Reform Alone Isn’t Enough

The DRUG Act is a step in the right direction, but let’s not pretend PBMs are just going to accept lower profits. Employers, CFOs, and HR leaders must remain vigilant, audit their pharmacy benefit contracts, and explore alternative models—including carving out pharmacy benefits altogether with true freedom to choose an independent PBM.

A link to the Press Release is in the comments.

📢 What do you think? Should prescription drug benefits be purchased separately from health insurance? Comment below! ⬇️

#PBMReform #HealthcareCosts #BenefitStrategies #HealthInsurance #DrugPricing

📅 Schedule a call today to take control of your health plan.

Questions? Contact the author at lcbernardi@britepathbenefits.com

Schedule a call at calendly.com/lcbernardi

Visit our website at www.britepathbenefits.com